Iron ore price soars as Chinese imports reach record high

On Friday, the iron ore price rebounded sharply from a 15-week low struck yesterday after customs data from top consumer China showed imports reaching a record high.

The Steel Index benchmark price for Northern China 62% Fe ore gained 4.5% to trade at $60.00 a tonne on Friday. Year-to-date iron ore has averaged $72 a tonne compared to $56.50 over the course of 2016.

China's iron ore imports constitute more than 70% of the global seaborne trade and September cargoes arriving at the country's ports jumped to 103m tonnes, up 11% compared to a year earlier. September imports rose by 14.3m tonnes from August. The previous record of 96.5m tonnes was set in March this year.

Shanghai rebar futures – the most actively traded steel contract in the world – soared 7% on Friday. Chinese steelmakers have been producing at record rates in anticipation of mandated output cuts during winter months in an effort to alleviate pollution problems in large cities.

"The market is still driven by production cuts amid Beijing's push to fight smog as we see some cities have implemented output curbs one month ahead of the plan," said Yu Yang, analyst at Shenyin & Wanguo Futures in Shanghai told Reuters.

"So when steel prices rise, mills have bumper profits and this has driven up raw materials too."

Beijing's war on smog has also pushed hundreds of domestic Chinese producers out of business as steelmakers opt for high-grade supply from major producers in Australia, South Africa and Brazil. The government recently announced that it would shut about a third, or around 1,000, of the country's iron ore mines which struggle with average grades of only around 20% iron ore content.